A refresher on Upstart in prep for Q4

With the UPST earnings just over a month away, I thought it would be a worthwhile exercise to read their Q3 transcript again.

The majority on this board have stuck with Upstart, with various position sizes, but as we’ve discussed, Q4 is shaping up to be the make or break moment of our relationship with this stock.

Personally, I think the Q4 guidance has been downplayed. They guided for $265m top end, which if they deliver, is 16% QOQ, similar to Q3, 17%. Now they beat the Q3 outlook by 6% and this is what Dave Girouard has said about guidance:

Analyst - I mean, are you kind of entering a phase where you’re sort of – what you’re guiding to and what you’ll deliver, do you expect that sort of accuracy to increase and thereby that magnitude of beat to be lowered as a result?

Dave Girouard – Chief Executive Officer

Hey Arvind, this is Dave. Yeah, I would certainly expect that.

So we know not to expect a crazy beat like we did in Q1 and Q2. But, there were a few nudges in the call transcript that are suggesting we could be looking at more than a 6% beat, for example:

From the CFO “In terms of macro outlook, we are seeing the early signs of a return to the pre-COVID consumer profile with personal savings rates in the economy ow having fallen back to pre-COVID levels, and credit card balances steadily edging upwards to within 90% of pre-COVID levels. We expect a continuation of this trend to eventually lead to an increase in consumer default rates consistent with pre-COVID levels. And we believe that any issuer who has not priced this in is likely to experience a deterioration in the performance of their returns.We also expect these macro dynamics to ultimately lead to an increase in borrower loan demand, although this has yet to manifest in our results and remains upside to our forecast, as the exact timing is unclear”

And… “We see that progress we’ve made so far in the quarter and what we have remaining in our roadmap for this quarter, and I think we’re very optimistic about it.”

So I may be clutching at straws here, but I think these two statements do suggest a healthy beat is on the way. Even if we get a 7% beat, so roughly $285m, we’re then looking at a significant quarter acceleration of about 24%. The market tends to like reacceleration.

So to conclude, refreshing my memory on where the UPSTART business stands, not the stock, has stabilized my conviction and I plan to hold going into Q4 earnings. Wish me luck.


Sounds reasonable. I also expect low or no guidance due to the risk of Omicron impact and expected Fed rate hikes. I don’t mean to imply I think these as subjects merit discussion, only that if I were a CEO trying to play the guidance game, I’d err on the low side due to uncertainty. I also plan to hold for a few quarters at this point. I could change my mind but this has always been a stock that has a lot of potential growth from applying their tech to more sectors, which takes time. I don’t want to hold only in the hopes of potential though, so will see how the numbers go.